Aer Lingus has reported an operating profit of €49.1m for 2011 compared to an operating profit of €52.5m in 2010.
Revenues for the year rose by 6% to €1.288 billion, while the number of passengers the airline carried rose by 1.8% to over 9.5 million.
Aer Lingus said its full year operating profits were better than anticipated at the start of 2011 mainly due to stronger yields. But it reported a difficult fourth quarter with revenue improvements offset by higher fuel prices and airport charges.
Pre-tax profits for the year were €84.4m, compared with €27.2m a year earlier, due to a number of once-off items in both years.
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The airline's chief executive Christoph Mueller said the profits were achieved against a difficult backdrop on ''non-controllable fuel price inflation'', increasing airport charges and challenging demand conditions in its main markets.
''I am very pleased to report that Aer Lingus generated an operating profit of €49.1m in 2011. This is the second consecutive year of good profitability under our new strategy and demonstrates the success of the changes we have made to the business over the past two years,'' Mr Mueller said.
The airline said its expects its main markets to remain very competitive in 2012, and it predicts that fuel prices are set to remain at their current levels for the foreseeable future. ''Our expectation for 2012 is that the group will remain significantly profitable, albeit below 2011 levels,' the airline said in its results statement today.
In the statement, Aer Lingus noted that the current level of people using Irish airports last year was significantly lower than the peak traffic volumes observed in 2008. It said that the Irish market continues to be dominated by non-business, leisure travel and as a result, is particularly exposed to adverse trends in ''personal expenditure levels''.
The airline said that pensions remains the ''most significant legacy issue'' affecting the group. The deficit on its Irish Airlines (general employees) Superannuation Scheme (IASS) comes to about €700m at the end of 2011, while its pilots scheme was estimated to have a deficit of €170m.
The Government indicated last week that it plans to sell its 25% shareholding in the company.
Aer Lingus staff set for bonus windfall
Staff at Aer Lingus are set to receive a bonus next week as part of a gain-sharing programme that helped to turn the airline around, according to CEO Christoph Mueller.
Mr Mueller said the Greenfield cost reduction programme had already achieved savings of €84m and would achieve the remaining €12m by the end of 2012. The airline had originally set aside €25m for a gain-sharing scheme for staff - subject to targets being met.
Having met its targets in 2010, staff shared a bonus of €6.25m early last year. If the company's remuneration committee approves it in the coming days, a second tranche of €6.25m will be shared between the 3,700 employees next week.
Mr Mueller said Greenfield was not just about savings, but said that the airline would pay the second tranche of a gain-sharing agreement to its 3,700 employees next week. He said the amount they would receive would depend on the employee's pay scale but would be a ''good payback'' for their contribution to turning the airline around.
He said the key difficulties facing the airline in 2012 were the muted economic environment, fuel costs and airport charges. He confirmed that Aer Lingus had been hit very hard by rising fuel prices, and expects its fuel bill to increase by €60m in 2012.
He pointed out that travel taxes and airport charges have now surpassed €50 per leg of a flight. He said so far the airline had not needed to pass on those charges to the passenger but if there were no end in sight, the airline could not pay it out of its own pocket.
Mr Mueller described the €700m deficit in the Irish Aviation Superannuation scheme as quite frightening. He aid there was no obligation on Aer Lingus to pay anything to fund that deficit, but said they were engaging in talks at the Labour Relations Commission.
The CEO said that Aer Lingus' goal for 2012 was to stay profitable, and confirmed that the company would be in the market to buy additional slots at Heathrow if they became available.
He also confirmed that no staff member had been disciplined following the "leave and return" controversy which cost the airline €34m.
O'Leary warns Aer Lingus on pension scheme
Ryanair chief executive Michael O'Leary has said Aer Lingus would be in breach of its fiduciary duty to shareholders if it were to put any further money into the defined contribution pension scheme.
Speaking in London today, Mr O'Leary said Ryanair was already working on legal action against Aer Lingus aimed, he said, at protecting the interests of shareholders.
"We don't believe the interest of the shareholders will be served by taking some of Aer Lingus's cash pile and gifting it to the employees or the pensioners," he said.
Mr O'Leary said what was clearly best for Ireland was to merge the two airlines, adding that if the Government's 25% stake were not sold to Ryanair it was inevitable that Aer Lingus would get broken up.
